There is truth here, but remember that the age of the intelligent networked machine is just beginning.
Look at the YC classes. They are very different from 2005. You can't get rich making a site like reddit today. YC is going international, with X for Y country businesses.
I was talking to a friend with a startup in Indonesia. In Asia its like 1998.
I think we are just at the end of the easy social/mobile revolution in the West and on the cusp of the next robotics/AI/IoT revolution.
And the same process that created cheap and easy tools for software, the same process that dropped the cost of starting a SaaS business 10x will happen for robotics/ai/IoT.
Its already relatively cheap and easy to prototype and fabricate things like low power bluetooth wearables.
Computers have just gotten tiny, low power, wireless and cheap enough to be disposable. These devices are about to be everywhere.
This is not the end of the tech startup gold rush. It's time to learn AI and hardware prototyping.
I can't speak such a broad generalization, but I noticed a learning curve/ trajectory of how people perceive opportunity online and the ideas they get excited about. It seems to depend when someone truly dove into internet and used it for everyday needs.
I only have anecdotal evidence to this, but I really think that most follow are following the same trajectory/learning curve about opportunity online and people are currently in place across that curve. We still have fewer than half the world online, and billions who are using the internet today the way we used it in 1994.
This is my theory for why old school domainers stopped buying domain names for a premium in 2007, and yet there are still people today paying a ridiculous amount of money for domain names, and thousands more investing in them like it's still a gold rush. That gravy train seemed to dry up in the last decade, yet somehow new people enter the market and fall in love. I bet there are still penny auctions making money and daily deal sites emerging, despite those trends passing years and years ago.
Those on the cutting edge need to remember that they don't reflect the bulk of the world, there is lagging opportunity for at least a decade in every space that seems to be owned.
I registered a domain last week directly from the registrar for $200 a year, which Is a lot for me. I know it is probably at least worth $1000 right now so I could get what I paid out of it at least. The point I am trying to make is that things adopt their real value, domains for an analogy are like real estate.
SF/SV/NYC/LON are very desirable areas and it takes a long time to build out that infrastructure. It is a supply/demand mismatch. Domains were these nebulous things no one understood but if you bought one, it was worth way more than you paid for it. However, JET.com and Genius.com were quite expensive because they are pretty desirable domains, nerdy.com just went for 25K. Supply has gone up so the localpetstores.co.com domains aren'rt really worth anything.
On balance, technology companies-- companies that are leveraging technology well and constantly improve as part of their business, will continue to do well. However, if you define technology as, with a computer then that sector is as descriptive as American or European. Companies in leveraging technology well:
Alphabet
Apple
FB (oculus)
Amazon
Intel
Companies often referred to as "technology companies"
IBM
Twitter
LinkedIn
GE
If you look at the highlevel descriptors, both baskets are fairly comparable, and that is the trap!.
Amazon has a globally unified distribution for digital media, technology applications, physical things, and a marketplace.
Alphabet.
Facebook has 1Billion users and owns much of the messaging. It is how people organize social search. They also are able to marry the phone messaging and image/moments, with the online community of the computer and soon bridge the devide to gaming and a truly addictive world of VR.
Intel is the world leader in building the thing every one of those companies runs on.
etc.
The mismatch between value and perceived value is becoming more evident. So it is, to quote our guy Charlie D, both the best of times and rthe worst of times, some have much infront of them and some have nothing, and the pundits will insist that it is a superlative of this or that, when in reality it is sameness: think hard, be more correct and capitalize on your view of the future.
edit: just to clarify, I plan on using the domain lest anyone think I am a squatter. Although, I do have a tendency to get sidetracked/change gears so I was using that as an analogy above.
> I registered a domain last week directly from the registrar for $200 a year, which Is a lot for me. I know it is probably at least worth $1000
This is a perfect example of the trajectory I was referring to. Back in 2006 I believed I could register a name from a registrar and turn around and sell it for $1000. I even knew the economics of domaining. All the monetization strategies, sales tactics, valuation models, and based my belief on comparable sales, etc... (in other words, there was real value independent of two buyers competing for it.)
Yet, now I believe it is tantamount to a scam. Intrinsically, there is no value in a domain name that you can register today. The value is a complete fiction. Sure, there are tons of suckers today buying names they shouldn't, taken in by the shining lights, but this is my point. The domain names that have intrinsic value are long gone and have been for over a decade. (i.e 2 & 3 character, dictionary words, short pronounceable & brandable, names, places, etc...)
The only value in domain names today is if two people both desperately want the name. Too often it is the ego of someone who falls in love with a name they thought of for their brand and can't untangle their ego from reality and end up buying a name that they didn't need.
In a few years, their knowledge will catch up with mine today and they will perceive the opportunity the way I do. The same way in a few years I will have the experience to view things in a new light. I have to remind myself that someone exposed to domaining in the last 5 years doesn't have the benefit of learning what I learned over the last decade.
> domains for an analogy are like real estate.
I used to share this belief, but now I believe it is built on a fundamental misunderstanding.
Fundamentally, the only thing that would give a name value like real estate is if its easier to spell or remember. I.e. more accessible than another name. There really is no intrinsic difference between genius.com or smartbloke.com or owlsmarts.com All are short, easy to spell, easy to remember, easy to tell over to friends, and conjure up the same general idea. Yet, domain sellers will have you believe that genius.com is worth 10x-100x the value of the others. This is a pure fabrication.
Real estate and location have very real dynamics like accessibility, visibility, local demographics, parking, passing traffic, etc...
In the old days, a domain name with type in traffic would trade for 4-6 years revenue from parked traffic. That was comparable to real estate.
My point is simply that I can't understand how someone buys a great generic domain name for 5-6 figures like nerdy.com, when they can accomplish 95% of the same thing with any two dictionary words like, " nerdybird.com or nerdyduckling.com , etc...
I agree with you for the most part and it is possible-- quite likely even, that I am saying my example is the exception to the rule, but generally it is not the case. However, I am not domain squatting and the economnics aren't there to do that anyway, it was to illustrate the larger point that some domains, like real estate assets and "tech" companies are very valuable while apparently similar substitutes are not value and actually quite dangerous.
Currently, subtle differences make a big impact on metrics(growth, value, price) & the market is beginning to price these in. If you have seen the big short, it is a great movie, but the opening line is something like:
It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.
So try to check myself when I think about something like this, although it is obviously difficult. In this current framing, certainly one or both of us, is wrong and it is sort of a matter of timing.
I think we are in 1993 and you think(I don't want to put words in your mouth) are in 98'. Either way, if you were in 93 or 98 and knew what to look for you could have made a lot of money, and you yourself may have because you were fundamentally correct when others weren't.
So on balance, I think you are totally correct and I do not disagree with you. However, my estimation is that many people are making the mistake of grouping unrelated things together and drawin g a conclusion, when I think that in fact, the opposite could be true currently.
"the age of the intelligent networked machine is just beginning"
This sounds like pure denial. You don't want to face a painful truth, so you create a rationalization. But your sentence could be applied to dozens of other maturing industries, and your sentence would be wrong in every case:
In the 1880s: "There are thousands of oil reserves that no one has discovered yet, therefore the field remains wide open to innovators who want to take a risk on a new field."
And yet, after 1880s, the industry consolidated into a single behemoth. Even as late as the early 21st century, wildcatters could still make some money off a hard to reach patch, if prices were high enough. That didn't change the fact that all the big profits were held by a few near monopoly powers.
In the 1880s: "Much of the country can not yet be reached by train, so this industry is wide open to innovators who want to build new lines."
And yet the train industry consolidated after 1880.
1920s: "In automobiles, there are still vast innovations to be made to make brakes reliable, and someone needs to invent an automatic starter, since hand crakes are now dangerous, given the growing size of the engines. And an automatic transmission would be an amazing breakthrough, if anyone can figure out how to do it. The space is wide open for innovators who can solve any of the many problems that remain in the auto industry."
But the auto industry consolidated from that point forward.
In the 1980s: "The CPU is a new idea and the path forward for processors is still wide open to innovation."
And yet, Motorola was founded in 1928, Digital Equipment Corporation in 1957, Intel in 1968 and AMD was founded in 1969. The dominant powers for computer processors started a long time ago, the field consolidated when much was still unknown about the ideal strategy for processors.
There are industries that clearly have not yet emerged as stable entities with a clear path forward. Genetic engineering is an obvious one. But the software industry is clearly much more consolidated than it was in the past.
The train, the automobile, and the microprocessor were all harbingers of exponentially increasing wealth and opportunity. Each technology lowered the cost of starting and running businesses, as well as giant ancillary businesses and markets.
The microprocessor preceded the gold rush we're eulogizing here.
They all spawned brand new ecosystems that created entirely new opportunities for entrepreneurs to create wealth. The train even unified some nation states that didn't exist.
It's possible that you did not understand the original article. Or perhaps you did not read it. When you write:
"Each technology lowered the cost of starting and running businesses"
No, not in those industries. When an industry consolidates, the cost of the starting a new business in that industry skyrockets. Eventually it becomes impossible to start a new company in that industry. That clearly happened for trains and automobiles, microprocessors, and certainly now for Internet companies.
This is a pat re-statement of a tired cliche:
"They all spawned brand new ecosystems that created entirely new opportunities for entrepreneurs to create wealth."
There will probably be economic growth in the future. I mentioned one obvious industry that is still forming: genetic engineering. That doesn't change the fact that the gold rush has come to an end for Internet startups.
Here you are changing the subject:
"The train even unified some nation states that didn't exist."
I come back to my original diagnosis: Your comment sounds like pure denial. You don't want to face a painful truth, so you create a rationalization.
Pretty sure this is troll feeding but in case you're sincere:
I didn't say cost was lowered in the "train" industry. Cost was lowered in the milk industry. Because after the train people didn't have to keep cows in urban areas to have fresh milk.
Your diagnosis is wrong. I've spent the last year focused on internet connected hardware, immersing myself in all the amazingly powerful new tools that just got cheap and open source.
The things I've made, the possibilities, the wonder of designing something on a screen and having it manifest itself in the world, so you can hold it and it comes alive right in front of you. The next evolution of internet techology is going to be so much better than CRUD apps ever were.
Adopt a broader view of internet startups friend and you will see the internet is just the communication/coordination channel for our cybernetic future.
> the gold rush has come to an end for Internet startups
I can see the arguments for that but on the other hand the internet unicorns are popping up like never before. Maybe they are overhyped but Slack etc are doing ok. I'm not sure things are dramatically different in 2016 compared to 2013 when they launched for example.
So you don't think the age of AI is just beginning? It seems to be to me, at least from the point of view of making money. We've got walking robots and self driving cars in development but not selling significantly yet. That will change. I daresay it could just get dominated by Google but there are probably opportunities for startups.
I think you are on to something. this post was on HN a few weeks ago about how deep learning is no longer interesting because it has become routine. My first thought when I read that was "deep learning just became interesting because now it's stable enough to build a business around". The end of one cycle is just the beginning of another one. Find out what that new cycle is, hop on, and strap in.
>> And the same process that created cheap and easy tools for software, the same process that dropped the cost of starting a SaaS business 10x will happen for robotics/ai/IoT.
So OK, we've got tools for the IOT(mbed/arduino, etc). The key question is - how do you protect your product from being rapidly copied by big competitors(or worse, china),when they are using those same tools ?
In web development, we did it by getting tons of users really really fast and using that as a tool. But hardware markets are much slower.
That leaves us having unique, well protect IP(if you want a unicorn). And maybe this can be created by a startups, but a totally different type of startup: Maybe based on long university research. Maybe based of on a group of exceptional multi-disciplinary people with unique skills working together - and not a bunch of kids with an idea.
It's a pretty simple idea actually --- tie your IoT device to a backend service and never worry about competitors stealing your UI/design.
Case in point: the Nest Dropcam uses backend services to do image detection and alerting, two things which require skills hardware manufacturers often don't have.
Heres one idea for such a business. Design and build some type of intelligent, networked sensor that gathers X valuable data.
Find a way to get enough devices installed in the right places by the right people, or better yet take to seas.
Sell your sensor network data, which is analyzed with some type of machine intelligence to make it more valuable.
The ocean is a rich place to find such data.
Low power computing + motors + wires + rapidly prototyped printed, or machined or laser cut parts + low cost sensors + web backends + newly accessible ai libraries = infinite diversity in infinite combinations.
We won't run out of startups like that until we're living on a fully networked intelligent planet.
I think there will be a dip at the very least in the upcoming months, but yes, longterm we'll have another boom and it will presumably involve IoT, AI, VR, AR, ect.
As someone who has worked at Google for a few years, I can't agree with the author's characterization of tech behemoths. While they have embraced the start-up mode of doing things for some new projects and are very free with their investing, their core business is everything you'd expect from a big business.
I'm not sure it's possible to grow as large as Google, Apple or Facebook and remain agile. The product and organization gains too much inertia on its own. Even if you have a brilliant idea for improving the product there are hundreds of people you need to convince, months worth of meetings and reams of design docs required.
The big companies may be innovating on the edges, but their established products are all ripe for disruption.
Of course, if you look too disruptive they'll probably just buy you with their mountain of cash.
> [...] their core business is everything you'd expect from a big business.
I have worked for a bank before coming to Google. The biggest difference, even in the core business, is that people speak up to management and call bullshit out.
Memegen, for all its flaws, wouldn't survive one week in the open in a bank, and the perpetrators would be fired.
I believe he's saying that Google is more open, and people are willing to speak up (including to management).
That has been my experience so far as well.
I was also in banking and financial services before, and I found people tip toe around management a lot more.
And MemeGen is an internal thing, and I won't say anything beyond that. (I understand what the poster is saying, but I don't think it's necessary to understand his/her pointl
That's only if that distribution channel is your only access to the customer. If you have other alternatives, you can (and often will) still win.
Google Videos vs YouTube. Orkut vs Facebook vs Google+. Facebook status messages vs Twitter. Google Offers vs Groupon. Google Flights vs Kayak or Hipmunk. iMessage vs Whatsapp. Google Local vs Yelp.
There're plenty of examples where the big company came out with a competitor (often getting to market first, eg Google Video or Orkut), stuffed it through the distribution channel, but lost to a startup that nailed the user experience. Having a big channel doesn't matter if your conversion rate sucks.
Google makes good products, but doesn't market them properly.
They can screw up great products too. I miss my old YouTube. I currently have videos up that I can't access.
It seems like tech companies are prone to an--I don't know the correct word/term, so I'll just say it. They remind me of a hiker on a mountian. At first, the company seems great. We all join. We all use their products. Then it's downhill. I honestly don't know what Yahoo even does now. I am embarrassed to use my yahoo email--for what reasons, I just don't want to hear some yahoo say, "Ah--you still use Yahoo. That brings back memories."
I don't use Yelp anymore. Why?
I just don't want to be one of those people; Those whiny, picky people. See, it was once a good site. Now I cringe when ever I see their commercials. In my mind, they are going down the hill.
If I owned a big company, I would just prepare for the eventual day if goes down that sine wave.
I still think there are big opportunities in tech. I would open up my garage to the right people. I would hire Hackers. Guys with nothing to lose. I would keep a close eye on the legalities of what these "convicts" do though. I've never felt guys who take big chances, without a backup, are given enough business opportunities.
YouTube basically won against Google Video because they allowed pirated content. They took an enormous legal risk which Google Video didn't and it paid off. It almost didn't pay off.
It was a bit more than that: Google Video initially didn't allow user-generated content and when they did, the upload process was much more involved than YouTube's (largely because of fears of copyright infringement). They also had a much better embedded video player - I first ran across YouTube because all my friends were sharing it across LiveJournal, while Google Video embeds were awkward and ugly. And their whole experience was designed to get you to click through to another video - the YouTube founders themselves said that the site took off when they added the "related videos" feature.
But even assuming that it was all because of pirated content, that's a good example of an advantage that startups have over entrenched incumbents. If you're a 6-month-old startup and you get sued for a hundred billion dollars (and lose), you just go bankrupt and try again. If you're a 10-year-old company and you get sued for a hundred billion dollars, you lose a hundred billion dollars. The risk/reward tradeoffs are dramatically different.
Unless they decline the offer, like Facebook did and Google did and almost every current big company did at some point. If you are wildly successful there WILL be that option in front of you at some point.
> "The big companies may be innovating on the edges, but their established products are all ripe for disruption."
It looks like a cycle. Come up with new product with a small team, add more employees, add more managers, add more cruft, slow down.
Then a startup comes along, moving faster, innovating faster, disrupting until it grows and starts to add more employees, add more managers, add more cruft, slow down.
This cycle that you're depicting, is largely sustained by fear.
Big companies buy 'disrupters' when they fear their market share is at risk. But most of the time their market share is not at risk, and they should just wait for X startup to crumble.
> Big companies buy 'disrupters' when they fear their market share is at risk.
Yep. I can see why they don't wait for them to crumble though. What if they don't? That's a big risk to take.
When a potentially disruptive product gets bought, it virtually always means death of the product. You get fed a line about how it's going to keep going, and then a few months down the line, it has all been integrated into some existing big company product.
What's sad to think about is that sure, a lot of these companies would have failed, but how many would have succeeded? We'll never know. I don't blame founders: it's pretty hard to say no to a mountain of cash when your future is so uncertain. But deep down, I still wish more would take the gamble.
TechCrunch, the over confident tabloid reporters of hype who only a few weeks ago were all breathless about 'unicorns', are now swinging the pendulum to the other extreme. I'm in the bay area and there is a new realism for sure, but the idea that low buck entrepreneurialism is 'over' is absurd.
Most of the current wave of tech's origins are in the Web 2.0 'read/write' web that came after the dot com pump and dump funding fiasco...twitter et al grew out of the ashes of the last vc and wall street debacle. we are a similar inflection point IMO, where honest innovation will be more important than megabuck funding fests...
I think you're right. Most of what we read in media is the latest hype. Unicorns were hype and covered to no end. This weeks hype is the end times of tech.
There's no middle ground in most of the news I read. Imo, the markets are tightening up forcing companies at all stages to cut their budgets and/or generate revenue.
Tighter markets and harder conditions does not equate to the stagnation of tech. They are not the same. In fact, constraints lead to greater innovation.
It's somewhat clear that were headed for a bit of a downturn, but this article reeks of the "everything that could be invented has been invented" fallacy.
I think it is also kind of missing that you can't easily draw parallels with the past here, as the field we are mostly talking about – software making, I think – is the first(?) modern big industry field where the means of production are in the hand of the workers. You can't easily compete with car companies, cause most of us won't have the means to even produce a prototype. But nothing is stopping someone capable enough from building his own OS, for example. And yeah, then we come to the forces of design and market share, but still – this is fairly new and distinct.
There's still plenty of money, talent, and success out there for new, good ideas. It being hard to fund the same old thing again and again is more of a feature than a bug.
And the argument about the last few YC classes - it takes years to see who the stars are. I remember seeing one of the founders of Stripe speak when they were in YC. It wasn't clear they were going anywhere. What they were doing was cool, but there wasn't exactly lots of hype about it. Their success only looks obvious in hindsight.
It's not startups that are losing their luster, it's tech-for-tech's-sake companies. Now that we pretty much have everything we need to be connected, we have to look beyond technology and to the strongest fulcrum of society: culture.
Culture companies are the future. When you can get anything anywhere, the brand matters far more than the product. Anyone can make a burger or a pizza, so why are McDonalds and Pizza Hut crushing it across the globe, especially in China?
We're already seeing this with news. Traditional media companies are struggling to adapt while media outlets with personality like Vice (and Slate, and Quartz) are doing better than ever.
When all the gold is mined, when all the tech is made, the only thing that's left is to sell yourself.
Clarification: tech as in tech for this computational generation (i.e. Smartphones). Pretty much everything there has been done, and it won't be until new platforms that exist (like drones and VR like you mentioned) that interesting things will be made.
That being said, such shifts do not often treat incumbents well. Microsoft dominated the PC market in the 90s and early 00s, but their smartphone/tablet is barely a footnote in the market.
He said: "Today’s tech behemoths aren’t the lumbering giants of yesteryear. They are leaner and meaner and more competitive precisely because they have co-opted the same technologies startups used to attack them."
But this is far from true with the huge entrenched healthcare tech companies. Many of them haven't even begun to employ the newer software technologies. I'm down the street from the largest medical center in the world and numerous doctors and nurses encourage me all the time with their complaints about the major tech players in the industry. SV has barely scratched the surface of what could be improved and I look forward to seeing many more entrepreneurs join us in this $3 trillion industry.
> Move into new fields that have not (yet) gone through this transition. Tech giants may have adapted (somewhat) to the startup threat, but there are other fields — healthcare, for instance — still trying to adjust to last decade’s technology. These will remain fertile ground for some time yet.
However, we know that this is not an easy field for many reasons (regulations, importance, no mistakes allowed, …). There is a reason why this field seems that stale.
Yes, I think that's exactly right. Perhaps a combination of regulations while a lot of other industries have also enjoyed the spotlight more in the past decade or two. Hence healthcare hasn't attracted as much software talent. A few days ago I got into a Twitter exchange with my insurance company explaining to them why they should secure their login form, not just their registration form. Hopefully the social media rep will actually pass along the recommendation to IT as promised but even with stringent HIPAA regulations it's clear the industry hasn't been able to hire as many competent people as you'd expect for such a vital industry.
The problem with the medical and biological fields is: you generally need expensive equipment. Also, you will need expensive certification.
This is something that wasn't the case for software, so I guess this is also why this goldrush was so much different than anything else we've seen before.
A similar problem is where the medical and software industries butt heads. The Software industry likes to take risks and move quickly. It embraces failure. Medicine avoids risk and moves methodically because of that pesky Hippocratic Oath. Failure is often a life and death situation.
My father is a physician. So we've had lots of conversations about this problem. I also here all of his complaints about software. Especially EMR (Electronic Medical Record) systems.
Good point, but my medical friends' complaints tend to be about the software they have to use more than anything else. And on top of that there's a lack of software tools for a lot of things they do.
There is lots of good bioinformatics software. The problem is often that institutions don't want to pay for it, because open-source software is available with similar functionality (albeit with lacking user interfaces).
In my experience, it is very difficult to make money with scientific software in general, so I'm certainly not expecting a "goldrush" here.
I agree to some degree (!) but I believe a lot of the software used by medical personnel in their daily routines could use an overhaul, plus numerous other modern tools could be given to them for daily use.
HIPAA (among other things) makes it Not Fun™ to be in that space. It's not that it isn't ripe—almost overripe—for an overhaul, but that the bureaucratic requirements tend to attract, well, bureaucratic types and reject people of a more "disruptive" nature. There's no particular reason why software and systems that can pass audits can't be as pleasant to use as any; it's just a matter of assembling a team of people that is creative, has both an aesthetic and ergonomic sensibility, and doesn't mind the kind of working environment that the process (and the auditors' interpretation of regulations; it doesn't matter what's actually required if nobody will certify that you've met the requirements) demands.
> But this is far from true with the huge entrenched healthcare tech companies.
The current SV business model is "hoover up personal information people don't completely realize they're providing you, then use it to sell them marginally-more-effective ads." That works for "social" websites and taxi companies that aren't taxi companies, but I doubt it will fly for health care.
I like to scan these articles for numbers before reading. If I don't see any, I exit out.
If you're going to talk about financial/economic phenomena please at least conduct a modicum of quantitative research and give us some concrete data to discuss, not just opinions in a void.
There's maybe one small number observation, I m not sure if it's correct as there maybe high growth YC companies which will soon pass those 3/4.
"In 2011, Y Combinator’s poster-child alumni were — already — AirBNB, Dropbox, and Stripe. Can you think of any Y Combinator companies from the last five years as well-positioned today as those Big Three were then? Maybe Instacart, if their unit economics work. That’s it."
That observation has a huge amount of hindsight bias. AirBnB was founded in 2006, DropBox was founded in 2007, and Stripe was founded in 2010. What did the ideal startup look like in 2007? It was one of:
"A social network for X, like Facebook"
"A social news site for X, like Digg"
"A way to massively improve your e-mail experience, like GMail"
In other words, people always chase the massive startup that got popular about 3 years previously. This article is pretty much on-time if it's holding up AirBNB, DropBox, and Stripe - those are the massive startups that got popular about 3-4 years ago.
But in 2007, these were most decidedly not the hot industries to go into. Hotels were a done deal: Hilton, Marriott, Holiday Inn, and others chains owned it, and who would think a tiny team could take them on? Filesharing was an incredibly crowded market with 20-30 players, and in any case, if it got popular Google was going to crush them with Google Drive. PayPal owned payments; everybody knew it was a regulated industry with strong network effects, so why bother to compete?
You don't need hard numbers to philosophize about the tech industry, nor economic phenomena in general. Read blogs like ibankcoin/flyblog or zerohedge and you will find financial/economic articles written with data that is ancillary. That is, the hard data is not immediately required to make the point.
It could have had better supporting arguments and evidence, but I couldn't find enough of it and just skimmed to the end to make sure I wasn't missing it.
Maybe the "gold rush" is over. But there's still a heck of a lot of gold to mine. We're not even close to the point where there is no more valuable software to be written (and sold).
No the social gold rush is gone. Everybody who wishes to get online is online already with something and you have displace that.
And "gold rush" is a good term--"land grab" might be better. The fact that the "disruptive" companies are all now skirting or outright flouting the law shows that the easy land is taken.
If it's highly profitable, it's either illegal or difficult. Easy and profitable means that, even if you're first, the horde is inbound.
Those of us with real products that can't simply be done with 4 20-year-olds and a dog in Ukraine? We're chugging along, thanks.
Yeah, raising money is getting really annoying, but, if we can't, we'll bootstrap. Funny that, bootstrapping is an option when people pay you money.
And, do remember, the people who made all the money in the gold rush weren't the miners, it was the people who sold shovels and alcohol.
> do remember, the people who made all the money in the gold rush weren't the miners
I was curious so I googled. Wikipedia: There were 300,000 gold-seekers and "On average, half the gold-seekers made a modest profit, after taking all expenses into account."
So probably better odds than the people doing startups. One person who made a lot of money was Levi Strauss who stated selling denim to the miners.
Well the official answer was "this change isn’t driven by profit–it’s about aligning our culture and core competencies with our core customers’ needs. There are many people who use Mandrill as a (free) utilitarian infrastructure service, who are not our core customers, and who deserve to use a company that’s better set up for that in the long run." https://blog.mailchimp.com/important-changes-to-mandrill/#co...
>Everybody who wishes to get online is online already with something and you have displace that.
I don't think that is true. Less than 50% of humans have regular access to the Internet. Do you really think that more than half the people on the planet do not want to get online?
Those countries are getting wealthier and the economics of the world are slowly shifting. We have maybe 1-2B people online with capable devices and abundant bandwidth. That leaves 5B yet to connect and another 3B who will want to connect over the next 50 years as population continues to grow.
You can see Facebook and Google scrabbling over themselves to get a share of the emerging markets. Google is trying to pair down Search so they can get it onto those 2G connections. Facebook is trying to give away bandwidth. They both know there is going to be a lot of money in those markets soon, but no one knows exactly how that economy is going to evolve.
Even in 2008, there was a lot of denial about the impact of the downturn on Silicon Valley.
"And they assert that they are not feeling anything like the pain that followed the collapse of the dot-com bubble, which led to big job losses, an exodus of talent, a plunging commercial real estate market and a significant drop in investment in start-up companies."
Interesting article but I think it has a critical flaw — not all startups are in the consumer space. Of course, there’s not going to be another Facebook for the next couple years at least, but another Stripe — maybe?
It's funny because the means through which big business tech companies have "co-opted the same technologies startups used to attack them" is through buying said startups. So no, I don't think it's all over.
You can't type on a keyboard and make an automobile factory that can compete with the big car companies, but in software, you pretty much can. It's a pretty chaotic market for this reason even if there are big dogs.
All of these claims are true in any market, but we ignore them during booms because fundraising is easier (and de-risks our startup involvement). The only novelty in this article is a return to honesty.
I agree with this article overall, especially re: Google, but I do not agree about Facebook. Most American users 13-25 do not use Facebook anymore.
Facebook will either have to work out a business model that makes it profitable to frequently buy WhatsApps/Instagrams and then Snapchats/Telegrams/etc or they will end too.
I agree. I ask myself this question; "If <x> was to disappear tomorrow, what would happen?"
The answer for Facebook and me, is nothing. If Google disappeared tomorrow, I would be hurting for many services I probably take for granted. I suspect if Facebook disappeared tomorrow, most people's lives would not materially change for the worse. Perhaps they would even change for the better.
I've gotta say as someone who is not actively developing full time, most of the comments in here read like people in denial. It doesn't really matter what anyone's opinion is, or what any of us say though - the future will bring what it brings. That said I hedged my bets a couple years ago against the tech world's macro economic future and culture.
> Over in The Information, the Lessins argue that “the period where tech startups can readily disrupt larger tech companies is ending for a simple reason: Today’s tech behemoths aren’t the lumbering giants of yesteryear. They are leaner and meaner and more competitive precisely because they have co-opted the same technologies startups used to attack them”
I disagree. I am reminded of the comparison of the prisoner and the warden, where the warden [behemoth] has his whole life to think about whereas the prisoner [startup] is only thinking of escape [way to get a leg up on the behemoth]. The difference is that many people see the behemoth with no obvious weaknesses and give up; but if they had the same weaknesses they exploited, that would be too easy wouldn't it?
> Over in The Information, the Lessins argue that “the period where tech startups can readily disrupt larger tech companies is ending for a simple reason: Today’s tech behemoths aren’t the lumbering giants of yesteryear. They are leaner and meaner and more competitive precisely because they have co-opted the same technologies startups used to attack them” and so “until there is another fundamental technology disruption, the window of opportunity for startups is limited to more traditional markets with less competitive players.”
Oh, come on. Where there are BigCos, there is inherent bureaucracy slowing them down. Creating a startup gives founder engineers the opportunity to massively create wealth in a way that BigCo simply does not incentivize.
After the technopolies will come the decentralized technologies like the block chain etc. Then we will eventually get a common platform built on things like an AST format (e.g. web assembly) with a semantic module registry allowing for creating interfaces across programming languages to integrate and evolve the decentralized tech. Then we will get into competing smart contracts and localized systems that limit company size and regulate social interaction via the technology. Then we will have superintelligent hybrid systems with features we can't anticipate now.
Consumer may be entering a trough but the industrial internet is rising. Social and enterprise SaaS are highly saturated, but these become tools for the next generation of companies. The next wave of technology is characterized by technology that senses and interacts with its environment and this will drive tremendous innovation in the industrial internet (agtech, manufacturing, construction, etc). As these technologies mature, become less expensive and more ubiquitous, we'll see startups start diffusing back into the consumer space and the cycle will repeat again.
Now that TC announced it, it's official people! Time to close shop, pack your bags and leave.
Startup gold-rush is anything but over. Tell me this: if not into startups, where will the money go to find possible returns? Negative interest rates, oil price can't find the bottom and stocks aren't really going anywhere either. So where will this money go?
> Now that TC announced it, it's official people! Time to close shop, pack your bags and leave.
I had the same thought - TC is pretty much an eye-roll-and-move-on for me at this point.
However...
> Tell me this: if not into startups, where will the money go to find possible returns? Negative interest rates, oil price can't find the bottom and stocks aren't really going anywhere either. So where will this money go?
I think that the point here isn't that entrepreneurship is suddenly dead, but rather that
> [the big players] have co-opted the same technologies startups used to attack them” and so “until there is another fundamental technology disruption, the window of opportunity for startups is limited to more traditional markets with less competitive players.”
The various *AAS models may be coming to the end of their usefulness as a disruptive media, but there's plenty of "fundamental technology disruption" ahead: mesh networking, crypto-blockchains, embedded, VR, and on and on.
It will go into the giants, for whom the zero interest rate regime provided exactly the right conditions to monopolize by buying up their competitors. Things will only get more extreme in this regard until we accept that change is beneficial and let the giants.
The article provides no clear metric for success, just impressions based on brand success. Things are not so rosy for its darlings as it implies. A price to earnings ratio of 70+ is quite a risk, no matter how sure it seems that such a company becomes a permanent monopoly. I feel that the low (now negative!) interest rates offered by central banks are fueling a huge bubble in the valuation of these companies.
I disagree with the authors premise that there can only be 2-3 behemoths. Has he not been paying attention to how kids use mobile apps these days? No one is locked in to a single ecosystem like they used to be.
People use gchat, Facebook, Instagram, snapchat, whatsapp, and iMessage simultaneously, for distinct purposes. And all of their friends do too.
As long as the app present value, kids these days have no problems switching back and forth between apps, meaning they can get hundreds of millions or billions of users too.
The hardware hasn't really gotten significantly better in the last 10 years to get people on the upgrade treadmill again. Phones are on that curve now, but eventually they are going to top out too, and your iPhone 10 won't be that significant an upgrade from your iPhone 9.
I guess it depends how you measure getting better. If you're just looking at Mhz then maybe I can understand.
For me, 10 years ago I had to use a desktop to achieve much of anything. These days I have the power of my desktop except it weighs 2.65 pounds, wireless transfer speeds up to 1300 Mbit/s, has a 13.3in 3200x1800 touch screen, 256GB drive I can read and write much faster than my 3ware RAID0 setup I had back then. Its the size of an actual notebook and runs all day long without getting plugged into anything. Not to mention it only cost me $750 bucks compared to at least twice that for my old desktops.
For me, it feels like things have improved fairly significantly.
We're sort of out on one end of the bell-curve, really. For Joe Blow, average computer user, email and Word and YouTube works on their decade old hardware. Unless you're a gamer, there's not a lot of call to have the latest and greatest - and you can still run a lot of stuff on lower settings on old hardware. Long-lived console generations and the paucity of PC-first development have kept the minimum specs on even AAA titles pretty low.
For instance, my parents are happy as clams using a G4 Macbook and a second-hand HP Pavilion laptop
Look at the YC classes. They are very different from 2005. You can't get rich making a site like reddit today. YC is going international, with X for Y country businesses.
I was talking to a friend with a startup in Indonesia. In Asia its like 1998.
I think we are just at the end of the easy social/mobile revolution in the West and on the cusp of the next robotics/AI/IoT revolution.
And the same process that created cheap and easy tools for software, the same process that dropped the cost of starting a SaaS business 10x will happen for robotics/ai/IoT.
Its already relatively cheap and easy to prototype and fabricate things like low power bluetooth wearables.
Computers have just gotten tiny, low power, wireless and cheap enough to be disposable. These devices are about to be everywhere.
This is not the end of the tech startup gold rush. It's time to learn AI and hardware prototyping.